Sir Stelios Haji-Ioannou
We uncover the man behind the brand as company number 17 gets the easy treatment
Ask Sir Stelios Haji- Ioannou how many people it takes to change a lightbulb and he’s likely to reply ‘more than it should’ – then start a lightbulb-changing business. The entire easy empire has been built on removing cost, offering value and living the no frills ideology it pioneered.
Yet the organisation in the shape of its leader is paradoxically adventurous and ambitiously prodigious. In his latest show of self-rebellion, Stelios (his preferred moniker) discarded his vow to never venture from consumer to B2B by launching easyOffice. As you’ve no doubt lost count, that’s easy company number 17 in what’s been a rollercoaster ride of launches, losses, cut-backs and more launches, since Stelios cut distance from flyaway success easyJet and went brand building. Growing Business went in search of the real Stelios: risk-taker or risk-averse?
A bear of a man, Stelios is BIG in every sense. You find your hand lost in his when you shake it and your personality irretrievably surrendered when he talks. We track him down giving a talk to budding entrepreneurs: when he speaks there’s awestruck silence; when he laughs the room reverberates; when he leaves he’s mobbed. The two-minute stroll to our interview location exceeds 15 as he gives thumbs-ups to tooting black cabs and poses for photos with passer-bys.
Stelios is big three and rising. Only fellow knights Branson and Sugar are as well known by Joe Public – and let’s face it, if it weren’t for gruffly hollering ‘you’re fired’ Sir Alan’s profile would be as prominent as Amstrad’s post-80s, while Sir Richard remains iconic but increasingly detached with his head in orbit and his PR stunts Stateside.
The Sunday Times’ Rich List for 2007 ranks Stelios at 49 with a personal fortune of £1.29bn – yet, unmistakably, he’s the new entrepreneur of the people. Perversely, as an LSE economics grad not drop-out hippy or cockney Del Boy, he’s business’ Beckham. OK the analogy stumbles at looks, but he’s a consumer champion and boy does he know how to work it.
In the easyGroup brand manual he coins himself ‘Stelios the serial entrepreneur’ – and he puts everything into living up to it. From his frenetic commitment to brand extension to his frequent speaking slots; to his £3m 10-year scholarship scheme with LSE and Cass Business School; and funding of a £50,000 annual award scheme for disabled entrepreneurs with charity Leonard Cheshire Disability; Stelios breathes entrepreneurship and has enough material to dissect anyone’s questioning of his 2006 knighthood for services to it.
Not that he would, of course. The son of a Greek shipping magnate, his modesty over his upbringing borders apologetic. “I always respect self-made people more than rich boys like me,” he says. “I cheated because I got money from my father. Then again, when you’re 28 and you want to start an airline; and your last name’s unpronounceable, venture capitalists aren’t going to give you any money!”
Creating something off his own steam – the basic principle of entrepreneurship – drives Stelios. His admiration for his father is edged with a determination. “When I started easyJet the main drive was to be independent. Whatever I did in shipping people would say ‘your father told you to do that’.”
EasyJet and Stelios’ meteoric rise
That achievement’s been meteoric. Incredulously less than 13 years ago barely anyone in the UK had heard of him. By then he’d already started Stelmar Shipping Ltd, which was later floated on the New York stock exchange and sold for $1.3bn. In November 1995 he founded easyJet without any of his own aircraft, a yield management model and a budget mentality that did away with expendable luxuries such as seat reservations and in-flight meals. He set about exposing the industry’s incumbents as staid dinosaurs and took his message to the people via bright orange everything and ITV fly-on-the-wall Airline.
We’ll leave easyJet where it is: a roaring success – December 2007 end-of-year profits of £201.9m tell us all we need to know. Stelios remains the single largest shareholder of easyJet Plc, which licenses the easy brand from easyGroup but remains independent. It’s easyGroup that tells us more about Stelios and how he works.
Bold brand extension
A self-confessed Branson admirer, brand extension always appealed to Stelios. He’s evidently a natural starter and has frequently admitted it’s what he enjoys most. There are obvious synergies for several easy brand extensions: cars, airport bus services, hotels make sense. Internet, pizza, and male grooming don’t necessarily.
Stelios says he’s constantly absorbing trends and information so ideas are frequent. But even the average entrepreneur dreams up, say, 10 ideas a week before ditching at least nine. Tempting as it is to believe Stelios just puts all 10 into order, surely there’s some sort of elimination process?
“What criteria do I apply?” he asks, breaking into laughter and placing his forefinger into the air. “Whichever way the wind is blowing!!” he booms. “I’m being a bit facetious of course, but I’m risking my own money so I don’t have to make big presentations and go to board meetings. It is a lot of instinct.”
It’s this playful, whimsical, risk-taking confidence that earns Stelios the public’s adulation. However, it’s also attracted cynicism from the business press who’ve derided his ‘lack of focus’ and been quick to flag inevitable losses that partner risk. In fairness, the first years of easyGroup provided spectacular evidence. easyInternetCafe and easyCar exposed the dangers of Stelios’ over-zealous need for speed. At the pinnacle of the dotcom boom Stelios wasn’t the only one to get stung, but it was an expensive lesson nonetheless.
“easyInternet was a painful experience,” he admits. “It was a bubble period, we’d opened in Victoria and people were queuing around the block. The internet was exciting and I thought, ‘this is the next McDonalds’. We went for a mad rush and it didn’t work.”
Stelios rolled out 22 stores in eight countries, in addition to more than 50 concessions, inside just two years, including several expensive prime location freehold sites. The FT reported he pumped a whopping £80m into easyInternetCafe in its first 12 months. By the end of 2002 it claimed he’d invested an accumulative £93m and built assets of just £6m – that’s some loss at £87m. He was forced into a substantial downsize, selling off prime locations and splitting sites to be leased.
easyCar, launched in April 2000, was another expensive flop, with the FT this time reporting first year losses of £21m. It too was scaled down as the cost base proved too high for its budget prices, losing 90 of its 150 staff.
Others weren’t as catastrophic but struggled. easyCinema failed to grow beyond its one cinema before switching to DVD rental; licensing issues led to easyMobile becoming a telecoms price-comparison website (although a new offering is ‘coming soon’); easy4Men never worried target Gillette and scrapped a partnership with Boots.
Stelios is yet to lose a company and is wholly opposed to doing so. Like all of us, he has a tendency to gloss over his failures and focus on the upside. He insists he relishes firefighting too; saying at any one time he has a third of his companies needing urgent attention – and he divides his time accordingly regardless of what management consultants say about your top 10%.
easyCar and easyInternetCafe are now profitable – but neither will ever claw back net losses. If Stelios weren’t at the helm it’s fair to assume they’d be gone, but he’s adamant perseverance was preferable.
“If the company is unbranded I’d say ‘don’t throw good money after bad’ but it’s different with a brand,” he says. “Some businesses are doomed to stay small.”
Stelios continues to jest about launching if the wind blows in his favour, but you sense secretively he’s learnt from his heavier blows. One of his favourite business maxims is “don’t bet the farm” and you sense as he repeats it, it’s for his own good as much as the interview’s. “Every bet you take, make sure you can survive it,” he muses.
In turn, Stelios may claim there’s no formula for acting on an idea, but there’s a clear one emerging for launches and it’s certainly more risk-averse.
Rule #1: start small
Stelios heads all new projects with right-hand man and CEO Anthony Robb-John heavily involved, but few others. Less about thrift, it’s more a combination of lessons learnt and Stelios’ penchant for getting his hands dirty.”It’s pointless building big teams. It’s expensive and painful if it doesn’t work out,” he says. “The right people wouldn’t join on a crazy paper idea anyway so we begin with a small easyGroup team and then hire industry leaders after.”
Rule #2: outsource everything
Capital-intensive start-ups are out and Stelios is back-to-basics. “There are ways of using other people’s capital, assets, equipment, money, equity,” he says. Increasingly, new easy launches bear the group’s brand but the back-end is serviced through a combination of partnerships, franchising and licensing. “I focus on brand building; it allows me to grow the business without growing my own company.”
Rule #3: maintain brand values
Brand is everything to easy and Stelios lives it. The group’s brand manual extols what he expects of every company, employee, partner, licensee and franchisee. Flat management rules, ties are banned and no-frills isn’t just for customers.”I sit open plan. I don’t have a secretary. I book my own appointments. When easyJet moved from the shed, we moved to an aircraft hanger; bigger but just as spartan. It’s corrugated iron, orange and visible from out-of-space: it embodies all our brand values.”
V enturing into the unknown
But let’s swing the pendulum back. While Stelios is taking cost out of his launches, he’s still taking risks. After all, stepping into B2B with easyOffice is stepping into the unknown. Predictably, Stelios disagrees:
“I believe my target audience will behave like a consumer,” he says. “I’m asking people to pay with their credit cards in the same way they’d pay for a flight with easyJet.”
Stelios argues he’s entered a market that’s ‘inflexible’, ‘over-priced’ and ‘over-engineered’ – perfect game. He’s also more than aware of the 15% increase in UK start-ups over the past year. He’s a metrics person and you sense behind the casual exterior his economics degree is frequently called into labour.
“I didn’t write a business plan, but I said ‘this is the space; this is what it’ll cost; this is what we’ll have to charge to cover the cost; this is the reservation system; plug it all in and see how it works’. Of course, you never know if it will definitely work. People might not use their credit cards for instance.” (See MD Rob Hamilton’s account of how the deal was brokered, on page 32.)
Moving away fro m yield management?
One of the most intriguing aspects of the partner-based launches of easyOffice and easyHotel is the possible swing away from yield management, and increased reliance on consumer awareness of easyGroup’s brand values.
easyOffice’s Kensington launch worked on the yield management model; the first occupants paying as little as £10 a week for a desk and £30 for an office, then £100 a week with prices then rising exponentially. However, while Stelios insists the company will look to acquire more of its own offices and is rumoured to be in talks with Regus to acquire the not-to-be-confused EasyOffices.co.uk, stock through Instant Offices is sold to Hamilton’s standard business model in exchange for a 50/50 revenue share.
Stelios has found yield management inflexible at times in the past and it can be problematic when dealing with other people’s stock. There’s little suggestion he’ll move away from it altogether but simply applying the easyGroup brand to partners where clear synergies exist could be an easier hit.
“There’s a school of thought people will expect us to have offices somewhere we don’t. We’d be spilling traffic so where there’s unfulfilled demand and we will have to put 100% of costs through our system to meet it, I’d rather do a commission deal.”
Using partnerships and increasingly franchising also forces others to take on a higher percentage of the risk. December’s announcement of a £50m expansion of easyHotel, with plans to build 10 new hotels across Britain over the next three years, will be funded by existing franchisee Splendid Hotel Group. Lawrence Alexander, Stelios’ chief exec for easyHotel confirmed it’s one of several such deals lined up.
David or Goliath?
This might not sit comfortably with another of easyGroup’s core brand values, ‘taking on the big boys’, but Stelios is no stranger to flexing his muscles nor playing Goliath when he needs to.
His initial ambitions to build easy into a brand brought a spate of court battles, and accusations of bullying as Stelios sought to protect the easy name. It’s an allegation he refutes.
“I never bullied anyone. It was always lawful. Some people thought I was their ticket to wealth. There was a lot of opportunism and blackmailing. People think ‘I’ll set up a company, call it easy something and Stelios will buy me off’. We take action and what do these people do? They go to the press and cry.”
He feels the hijackers have got the message now. However, easy IP policy remains non-negotiable. Entrepreneurs submitting proposals to the company’s website legally forgo rights to the idea or entitlement to financial reward and equity.
Stelios explains the need for such handcuffing as a defence against potential ownership claims for ideas the group was already pursuing or markets it would naturally have entered.
It’s a fair explanation but reveals just as much about the DNA of the present day easyGroup and its founder, as the bold and brave trigger-happy consumer champion we’re more often presented with. Stelios prefers it his way, though.
Risk-taker or risk-averse?
It’s not hard then to see why Stelios is the people’s entrepreneur, but increasingly respected in business. With his natural negotiation skills and head for metrics it’s a winning combination that should see him sail free of future icebergs, even when embracing obvious passions such as easyCruise.
But hang on! Although Stelios might have grown-up, he still feeds off risk. It’s what makes him tick. In his own words, “it’s what separates entrepreneurs from the rest of society”.
Money’s not his core motivation, that’s why he wasn’t scared of losing it: “There are many easier ways to make money than starting a business. If you just want to make money, take out a trust fund.”
The verdict: risk-taker.